AMD's last battle of the Intel war?

With Intel's (NASDAQ: INTC) quarterly results being released yesterday, its closest competitor is yet again on the ropes as Intel pounds it ceaselessly. Intel and AMD have locked themselves in fierce pricing battles for almost a decade, but the constant leapfrogging each company has had in terms of technology prowess and price cutting were bound to take a heavy toll on both companies.

Intel announced a reorganization and a massive layoff last year. Advanced Micro Devices (NASDAQ: AMD) has -- twice -- readjusted its quarterly guidance for the current quarter based on a fiercer-than-fierce pricing battle with Intel in the last six months or so. AMD is now stating that first quarter sales will come in at roughly $1.225 billion after analysts and investors were expecting $1.55 billion (already down from a $1.7 billion expectation in January). AMD will also be cutting about $500 million in 2007 capital expenditures. Summary: not good news for AMD so far this year.

What can the chipmaker do? It's renewed focus on cutting costs probably means to Intel that AMD will relieve some of the pressure on price cutting on its chips, which will allow some price stability for both companies in 2007. AMD's strategy to constantly steal market share has come at a price (profits). Now the chipmaker may want to return to making profits and settle for less market share. Hey, even if you have 50% of the market but are not making a penny, what's the point, right?